World facing ‘most complex' situation in decades: WEF
President and CEO of WEF Borge Brende said it was still too soon to predict the impact of Mr Trump's swingeing tariffs. PHOTO: AFP
- The world is facing the 'most complex' geopolitical situation seen in decades, the head of the World Economic Forum (WEF) told AFP on June 24, warning that turmoil was 'impacting global growth'.
'It is the most complex geopolitical and geo-economic backdrop we've seen in decades,' WEF President and chief executive Borge Brende said ahead of a meeting of the multilateral forum in the northern Chinese city of Tianjin.
'If we are not able to revive growth again, we can unfortunately see a decade of lower growth,' he warned.
Officials including Singapore Prime Minister Lawrence Wong will attend this week's WEF meeting in the port city of Tianjin – known colloquially as the 'Summer Davos'.
The meeting comes hard on the heels of the United States' involvement in the Iran-Israel conflict and follows months in which the global economy has been battered by a tariff war launched by US President Donald Trump.
The World Bank in June cut its forecast for global growth for 2025 from 2.7 per cent to 2.3 per cent, following a similar reduction by the International Monetary Fund.
Mr Brende told AFP it was still too soon to predict the impact of Mr Trump's swingeing tariffs.
It is 'too early to say what these tariffs will end with because the negotiations are still ongoing', he said.
'I think the jury is still out, but the traditional globalisation we saw is now changed into a different system,' he said. 'That is a new chapter… especially since trade was the engine of growth.'
Mr Brende also warned mounting conflict could have a 'very negative impact' on global growth.
'China matters'
The WEF gathering in Tianjin comes at an uncertain juncture for the Chinese economy, which has struggled under a years-long property sector crisis and sluggish domestic spending.
'China really does matter,' Mr Brende said, adding he expects the country to account for almost 30 per cent of global growth in 2025.
'China is pivoting its economy more towards digital trade, towards services and also now opening up for increasing domestic consumption – something that is important,' Mr Brende said.
Officials in Beijing have since late 2024 unveiled a string of aggressive measures, including key rate cuts and cancellations of home purchasing restrictions.
But many economists remain sceptical that the Chinese economy can achieve the government's official growth target for 2025 of around five per cent.
With the tumultuous trade war threatening shipments from the manufacturing powerhouse, Beijing is looking to emerging technologies such as artificial intelligence as potential sources of future growth.
'In the past, trade was the driver of growth, but you cannot exclude that new technologies including AI can… maybe replace the important role that trade had', Mr Brende told AFP.
While trade will remain 'very important', he said, disruptive technologies can provide the productivity boost needed to 'avoid a decade of sluggish growth'.
Attendees bustled around a cavernous conference hall in Tianjin on June 24 ahead of talks with a line-up of speakers that includes former British Prime Minister Tony Blair.
Chinese Premier Li Qiang is expected to deliver a keynote speech on June 25. AFP
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'Conversely, if the de-dollarisation narrative is reasserting itself, I would expect dollar weakness to be combined with bond markets outside the US doing better than the US; US equities lagging the rest of the world; and/or alternative safe havens (whether perceived or otherwise) such as gold, Bitcoin, yen, franc and perhaps even the Singapore dollar, to do well.' Policy pivot or pause? On the Fed's and regional central banks' next moves, analysts are divided. Moody's Analytics' Ell cautioned that the threat of widespread tariffs remains a dark cloud, which means a sustained energy price increase would be a body blow. 'If this conflict keeps upward pressure on energy prices, the expectation that global inflation will stay contained should be abandoned,' she said. Julius Baer's Meier acknowledged that higher oil prices may exacerbate upside inflation risks, but maintained that the house anticipates only a temporary spike in oil prices. 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